Seedrs / Crowfunding platforms for investment

Selinda

Hi
Just interested in your thoughts on investing in new startups like those listed on Seedrs which I need to consider outside the obvious risk of new startups
I already have a SIPP, ISAs and have invested quite a bit in the last 12 months on the stockmarket. I have recently come across the Seedrs app and I quite like the look of some of the investment opportunities especially with added EIS benefits which offers income tax and CGT relief.
Risks related to actual investments on the platform aside is there anything else that I need to consider... Have any of you invested ? Any thoughts on Seedrs themselves? How easy to it to liquidate your holdings and I'd love to hear any success stories from those of you who have invested.

Thanks in advance

Aceace

I've invested in 18 companies via Seedrs over the past 3 years. 3 of them have gone bust and a few have risen in value. Its a very high risk investment, but, as you say, the tax benefits are considerable. My portfolio XIRR is currently showing as -0.55% (+21.07% tax adjusted). This is obviously totally dependant on which companies you choose. None of my investments have reached an exit yet, but some are looking good. I find it enjoyable, but I wouldn't invest anything I couldn't afford to lose. 

Yes, you can sell your shares on the Secondary Market, which appears to be quite active, for a 1.5% fee.  Shares are sometimes untradeable for a while, usually when Seedrs are aware of an even that could affect the share price that isn't yet publicly available (such as an impending new raise at a different price to the last raise). Seedrs also charge a 7.5% fee on any profits. 

DireEmblem

I have invested small amounts in Crowdcube over the years in 4 companies.  All are still trading, but I have not been able to exit to date.

As above, your money will likely be locked away for years so you need to be prepared for this, and you may not make a return so if you go ahead, I would suggest you keep this as a small part of your portfolio.

You are correct, the EIS benefits are great - IIRC, you can claim 30% of your investment back as an income tax refund.  Then for the remaining investment of 70%, if the company fails, you can claim tax back against this.  So if you are a higher rate tax payer lets say 40%, you can claim 40% of 70% or a further 28% back.  All in all, if you invested £1000 in a failing company, then by the end it would have only cost you £420.  Even that is not strictly correct, as the end outcome would be after a number of years, in which you could have invested the £1000 for a return.

https://www.seedrs.com/learn/guides/eis-tax-relief#examples has some good examples.


As an alternative, have you thought about investing indirectly to some unlisted companies through say Investment Trusts?  Chrysalis Investment Trust for example, has interest in Starling Bank, Transferwise, Klarna and several others.  That way you could liquidate your full position whichever Trust you choose and get access to the value of your investment at that time.

Selinda

Thank you... had not really looked at investment trusts but will do so now.
I would love to have invested in Transferwise (before the upcoming IPO)... Do they usually let you know who they have invested in as they go like ARK - it is quarterly update. Will need to check if they are on one of the platforms I use.